Dow closes at three-month low

NEW YORK — A slump in financial stocks Monday sent the Dow Jones Industrial Average to its first close below 10,000 in three months as concerns about the global economy and U.S. interest-rate policy simmered.

The blue-chip measure fell 103.84 points, or 1 percent, to 9908.39, near its intraday low in a session that saw selling accelerate into the closing bell. The Dow was led lower by a 3.5 percent decline in Bank of America Corp., while American Express fell 2.8 percent, Travelers fell 2.5 percent, and J.P. Morgan Chase fell 1.6 percent.

Investors weighed a report in the Wall Street Journal that Federal Reserve Chairman Ben Bernanke will begin laying the groundwork for credit tightening later in the year, bringing to a close a period of historically low interest rates that have made it easier for ailing banks to book big profits.

Market participants also kept a close eye on financial instability in Europe, where issues surrounding the creditworthiness of several countries have recently surfaced, sending shockwaves through the financial markets. See related story on European debt.

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The Dow slipped below 10,000 in each of the previous two trading sessions but in each case was rescued from a finish below the milestone as bargain hunters swooped in before the closing bell.

Traders said that the round-number level, which the Dow has repeatedly crossed over the past decade, still carries some psychological significance in its own right. Under the current circumstances, many are also curious whether it might be a stepping stone on the way to a 10 percent correction for the market, which many Wall Street veterans believe is overdue.

The Dow is now down 7.6 percent from its 15-month high set Jan. 19.

"This is the first time in three months that I think we've moved into a lower trading range," said portfolio manager Uri Landesman, of ING Investment Management. "Clearly, the sovereign-debt worries are first and foremost for the market right now. We're going to need some more clarity on that before we establish a new trend."

Keith Springer, president of Capital Financial Advisory Services, noted that market watchers had been saying for months that a pullback has been necessary, but now that the rally in stocks has come to a pause for several weeks, it has been met with increased fear and concern.

"Every time you have a market run-up everybody goes, 'We need a 10 percent correction,' and as soon as the market drops 5 percent, you have everybody crying," Springer said.

The S&P 500 fell 0.9 percent to 1056.74, led by a 2.2 percent decline in its financial category. All its other sectors posted declines as well, with the industrials, materials, and utilities categories down more than 1 percent each.

The Russell 2000 was down 1.1 percent. The Nasdaq fell 0.7 percent.

Among stocks to watch, Newell Rubbermaid, which has a plant in Winfield, rose 1.7 percent after Morgan Stanley lifted its investment rating on the stock to "overweight" from "equal weight."

Home Depot rose 2.2 percent after Morgan Stanley upgraded the home-improvement chain's shares to an "overweight" rating from "equal weight."

Hasbro leapt 12.7 percent after the toy company posted a 77 percent jump in fourth-quarter profit, exceeding analysts' forecasts. Hasbro also said it expects to grow revenue and earnings this year.